To The Moon

In today's edition, we will track the fundamental readings of long term bullish companies in strong (TigerTrade Top 1 Gainer) concepts each week and look forward to your attention and discussion.

Disclaimer：Capital at risk. This is not a direct financial advice or a recommendation to acquire or dispose any investment, but for communication only.

3 of the 3 indexes closed green. $DJIA(.DJI)$ (+1.46%) led, and Nasdaq 100 (+0.98%) lagged. The best-performing concept of last week is Alibaba Concept.

Alibaba Concept

Shares in $Alibaba(BABA)$ has jumped 21.92% in the past five days. The group’s Hong Kong-listed stock $Alibaba(09988)$ advanced 8.66%, leading tech stocks across the region higher to help the Hang Seng Index close 1.89% higher.

Why is Alibaba Concept soaring?

• Alibaba stock was on a tear last week amid signs that the tough landscape for Chinese tech stocks is improving. Progress has put investors on a buying streak.

• Investors have latched on to news that trickled out in recent days that Ant Group’s request to double its registered capital by 10.5 billion yuan ($1.5 billion). Alibaba owns one-third of Ant—which was founded by Alibaba’s own founder, tech titan Jack Ma—so the news is a boost for the Chinese e-commerce giant on its own material merits.

In this concept, let's take a deeper look at $Alibaba(BABA)$ because the company Alibaba is often referred to as "China's Amazon". Alibaba is very similar to $Amazon.com(AMZN)$ in that both are the largest and most dominant online e-commerce platforms in their respective home markets. For both BABA and AMZN, e-commerce in their domestic markets remains the largest share of their respective revenues

Below are the detailed analysis.

Keypoints:

1. Why Alibaba Group is a Strong Investment Opportunity?

2. Valuation

3. Alibaba's Growth Potential: Opportunities and Risks

Why Alibaba Group is a Strong Investment Opportunity?

Alibaba would be a strong investment due to its strong financial performance and growth potential. The company has consistently reported strong revenue and earnings growth, driven by the growth of its e-commerce platform and other businesses. This strong financial performance is expected to continue as the company expands its e-commerce platform into new markets and invests in new technology.

Alibaba is also well-positioned to take advantage of the growing trend of online shopping and e-commerce in China and internationally. The company's e-commerce platform, Alibaba.com, is the largest in China and the company is expanding into new markets, including Southeast Asia, the Middle East, and Latin America. This expansion is expected to drive further revenue and earnings growth for the company.

In addition to its e-commerce platform, Alibaba also operates a number of other businesses that are expected to contribute to the company's growth. These include a cloud computing platform, Alibaba Cloud, which is the market leader in China and is expanding internationally. The company also has a digital media and entertainment unit, which includes music and video streaming services, and a research and development arm that is focused on developing new technology.

Overall, the investment thesis for Alibaba is based on the company's strong financial performance, growth potential, and diversified business model. The company's strong competitive position in the e-commerce market in China and its expansion into new markets and technologies are expected to drive further revenue and earnings growth in the future.

Valuation

BABA currently trades at a forward P/E ratio of 11.56, which is cheap compared to its main competitors, as can be seen in the table below.

Alibaba Group Holding Limited currently has a price-to-earnings (P/E) ratio of 11.56, which is significantly lower than that of its competitors. Furthermore, BABA's earnings per share (EPS) of 7.51 is significantly higher than Pinduoduo's EPS. These financial indicators suggest that BABA may be a more attractive investment compared to its competitors. Furthermore, other important financial metrics are looking solid as well as can be seen on thebalance sheet. By example:

FCF Yield: 6.18%, indicating that the company could buy itself back in 16 years, if it continues to provide this cash flow.

ROIC: 11.95%, which indicates the company generates an additional $11.95 for every $100 it invests.

Gross Margin: 36.5% TTM. Indicating that BABA remains to have decent pricing power in a competitive industry.

Revenue 5-year annual growth rate Revenue (CAGR): 16.56%, this shows that BABA is able to continue its growth, even after all the tensions.

Alibaba's Growth Potential: Opportunities and Risks

One key driver of Alibaba's long-term growth is the increasing trend of online shopping and e-commerce in China and globally. Alibaba is well-positioned to take advantage of this trend, as the company's e-commerce platform is the largest in China and the company is expanding into new markets, including Southeast Asia, the Middle East, and Latin America. In these regions, there is a growing demand for online shopping and e-commerce, and Alibaba is well-positioned to capture a significant share of this market.

Another factor that is expected to drive Alibaba's long-term growth is the company's expansion into new technologies and businesses. Alibaba has made significant investments in research and development, and the company's research and development arm is focused on developing new technologies that can drive growth. For example, Alibaba is investing in artificial intelligence, machine learning, and the Internet of Things, which are expected to be key drivers of growth in the technology industry in the coming years.

In addition to its e-commerce and technology businesses, Alibaba is also expanding into new areas such as digital media and entertainment. The company has a digital media and entertainment unit that includes music and video streaming services, and the company is expected to continue expanding in this area as demand for digital media grows.

Overall, Alibaba's long-term growth is expected to be driven by the company's strong financial performance, expansion into new markets and technologies, and diversified business model. The company's strong competitive position in the e-commerce market in China, combined with its expanding presence in new markets and industries, is expected to drive significant revenue and earnings growth in the coming years.

There are, however, risks to consider when investing in Alibaba or any company, and it is important for investors to carefully evaluate these risks before making an investment. Some of the key risks to consider when investing in Alibaba include the competition and currency fluctuations.

Source: https://seekingalpha.com/article/4565975-alibaba-uncovering-the-risks-and-rewards

Hope this analysis help you get more understanding of the company's whole image,Tiger Picks will follow up the monthly performance as a longterm track.

What are your thoughts on $Alibaba(BABA)$? Bullish or bearish?